LONDON — Hunter and Ted Baker are girding their balance sheets for hard times ahead, raising money from shareholders ahead of reopening stores and resuming business in the wake of the COVID-19 pandemic.
The boots and outerwear-maker Hunter, a favorite of Queen Elizabeth and the royal family, said Tuesday it has successfully recapitalized the business in a move led by an existing shareholder, Pall Mall Legacy, and supported by Searchlight Capital, Pentland and other minority shareholders.
As part of the recapitalization, Hunter said its existing lender Wells Fargo will “augment and extend existing financing arrangements” for a further three years.
As a result of those moves, Hunter will have access to additional capital of 18.5 million pounds to support future growth.
Pall Mall Legacy is a Goldman Sachs-backed investment vehicle managed by Three Hills Capital Partners. It will invest new capital to become the majority shareholder of the company, with Searchlight investing additional funds and retaining a “significant minority position” and board representation.
Pentland Group will retain a minority shareholding and board seat, Hunter said.
Pall Mall, which first invested in Hunter in 2018, said it intends to bring new strategic and operational support to Hunter’s management through its team of senior retail industry professionals.
Founded in 1856, Hunter was quick to take advantage of digital selling, even pre-quarantine, and said its e-commerce business has grown strongly, and now generates about 30 percent of global sales.
Gordon McCallum, chairman of Hunter, said while the retail sector across the globe “faces huge challenges presented by the COVID-19 pandemic, we are extremely fortunate to have the support of our stakeholders, enabling us to successfully strengthen our balance sheet. This will ensure that we are able to withstand the current market downturn and emerge even stronger, to grow the Hunter brand over the long term.”
The recapitalization follows a shareholders’ decision in March to ask Alix Partners to oversee a sale of the company, a move triggered by a slump in sales due to COVID-19. While the search for a buyer was in progress, Pall Mall Legacy and Searchlight Capital stepped up and decided to keep control of the company via the recapitalization.
In another COVID-19-related move, Ted Baker said earlier this week it has raised approximately 95 million pounds via an accelerated bookbuild.
Some 127 million new shares are to be issued at an offer price of 0.75 pence per new share. The offer price, it said, represents a discount of 51.1 percent to the closing price of 1.53 pounds per ordinary share on May 29.
Details of the place and offer are being sent to shareholders this week.
As a result of the fundraising, and new shares issued, Ted Baker’s founder and shareholder of reference, Ray Kelvin, will see his stake fall from 35 percent to less than 16 percent, although he participated in this latest placing.
Following the placing, the asset manager Toscafund will now be Ted Baker’s largest shareholder with a 26 percent stake.
Kelvin has denied all of the accusations. Last year, Ted Baker issued a series of profit warnings and has been battling with accounting and management troubles.
Next month, as reported, John Barton will take over as non-executive chairman of Ted Baker, while, earlier this year, Rachel Osborne was promoted to the role of ceo. Formerly Ted Baker’s chief financial officer, Osborne is the third person in 12 months to hold the ceo role at the embattled company.